Federal Signal plans $10 million in cuts at E-One in Ocala

OCALA - Federal Signal, the parent company of Ocala's E-One fire truck plant, missed its earnings target for the second quarter of 2007, and E-One was the reason why.

Federal Signal CEO Robert Welding laid the blame for the quarterly performance squarely at E-One's doorstep.

"Our results were adversely impacted by worse than expected results at E-One," Welding said in a conference call for investors and analysts today.

Federal Signal's Fire Rescue Group, which comprises E-One and the Finland-based Bronto Skylift, is the only one of the corporation's four divisions expected to post an operating loss this year, said Chief Financial Officer Stephanie Kushner.

Welding and Kushner left no doubt that will mean job cuts at E-One.

"We have reassessed the priorities for this business and are implementing cost reduction initiatives, including some reduction in our staff functions, which should materially lower the breakeven point for our Ocala operation," Welding said in a press release before the conference call.

Kushner said during the call that the company will cut $10 million in fixed costs in Ocala by the end of the year. When asked by an analyst what positions might be cut, Kushner declined to specify.

"We haven't discussed that with the individuals who are affected," she said.

Federal Signal reported earnings per share Thursday of 23 cents for the quarter on income from continuing operations of $11 million, slightly below analysts' reported expectations of 25 cents a share.

The Fire Rescue Group reported a 3 percent increase in orders from the previous year, to $89 million. But the increase was largely in Bronto aerial platform products, which saw substantially higher demand.

The group's revenue for the quarter dropped 24 percent from the second quarter of 2006, to $75 million. Operating income for the same period dropped 78 percent down from $3.2 million to $500,000.

For 2007 to date, the group is losing money, with an operating margin of -1.2 percent. By the end of the year, revenue is likely to be down 10 percent or more, and the group is expected to post a slight loss for the year, Kushner said.

For more on this story and other local news, revisit ocala.com and read Friday's Star-Banner.

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